Some argue that the year 2024 marks the "year of involution" for China's new energy vehicles (NEVs), with a flurry of new car launches and prices dropping continuously. Both traditional automakers and emerging car manufacturers are facing an increasingly intense sense of urgency.

Against this backdrop, Hozon New Energy Automobile Co., Ltd., the parent company of NIO Automobile, has filed for an IPO on the Hong Kong Stock Exchange, striving to catch up with the listing pace of pioneers like XPeng Motors, Li Auto, Zero Run Automobile, and NIO. Hozon New Energy stated that the funds raised from this IPO will primarily be used for strategic expansion in overseas markets to enhance the global influence of the NIO brand.

As the main force in Hozon New Energy's efforts in the NEV race, NIO Automobile carries the hopes of the company in the era of new energy. However, NIO Automobile, which had been developing smoothly, saw a sharp downturn in its situation since last year, seemingly standing on the edge of a dangerous cliff.

After three years of significant losses, the halo of sales champion fades.

In 2019, the movie "Ne Zha" became wildly popular across the country. NIO Automobile, sharing the same name, seized the opportunity to launch the NIO N01, leveraging the movie's popularity to achieve a win-win situation in reputation and sales. Subsequently, NIO Automobile introduced higher cost-performance models such as the NIO U, NIO V, and NIO S, further consolidating its position in the NEV market.

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According to public data, in 2021, NIO Automobile delivered 69,674 vehicles, a year-on-year increase of 362%, making it the fastest-growing new force brand in terms of sales in 2021. In 2022, NIO Automobile achieved a total annual sales volume of 152,073 vehicles, a year-on-year increase of 118%, becoming the first new force brand to break through the 150,000-vehicle annual sales mark and claiming the championship throne among new car manufacturers.

At that time, brands like "NIO, XPeng, and Li Auto" were busy breaking into the mid-to-high-end market, with models like NIO's ES8, EC6, and ES6 priced mostly above 300,000 yuan. In contrast, NIO Automobile's product pricing was very consumer-friendly, making it more competitive in terms of price and attracting more consumers to purchase.

However, the good times did not last long.

Public data shows that in 2023, new force car manufacturers such as NIO, Li Auto, Zero Run, and XPeng all achieved double-digit growth in sales, while NIO Automobile's total delivery volume was 127,496 vehicles, a year-on-year decrease of 16%, making it the only new force car manufacturer with a decline in sales. From January to May 2024, NIO Automobile delivered 43,564 vehicles, only 14.5% of the annual sales target of 300,000 vehicles.Furthermore, Nezha Automobile has been increasing its revenue without improving its profits. Financial report data indicates that in 2021, the revenue was 5.087 billion yuan, and by 2023, it had risen to 13.555 billion yuan, with a compound annual growth rate of 63.2%. However, from 2021 to 2023, Nezha Automobile suffered consecutive losses for three years, accumulating a total deficit of 18.373 billion yuan.

The halo of being the sales champion for Nezha Automobile has dimmed, and the company is shrouded in the gloom of losses. It is not an easy task to bounce back.

The "low-price strategy" has hit a dead end, and it is imperative to save sales.

Facing a "cold" domestic market, Nezha Automobile is eager to launch new products and engage in marketing to boost sales.

On one hand, Nezha Automobile actively introduces new products and deepens the "cost-performance ratio" approach, hoping to stimulate sales growth. Taking the new model Nezha L as an example, it comes with both pure electric and extended-range power versions, with a price range of 129,900 to 159,900 yuan, which can be considered one of the products with a high cost-performance ratio.

However, the sales of Nezha L have been underwhelming, indicating that while the cost-performance ratio is a "safe card" for new energy vehicle manufacturers, it is no longer the "ace card." In May 2024, Nezha L sold 3,732 units, while its more expensive competitor, the Ideal L6, sold 12,965 units in the same period, a difference of several times.

On the other hand, Nezha Automobile uses innovative marketing methods such as short videos and live streaming to attract consumer attention and increase brand exposure. "Red Coat Master" Zhou Hongyi has repeatedly endorsed and spoken for Nezha Automobile, and Nezha Automobile's founder, Zhang Yong, has also started live streaming.

However, the selling point of Nezha Automobile's cost-performance ratio is not as effective in the current competitive environment of price wars, configuration wars, and intelligent driving technology.

Firstly, many car manufacturers such as BYD, Tesla, Geely, and Zero Run have significantly reduced their prices on a large scale, gradually weakening Nezha Automobile's low-price advantage. Secondly, domestic new energy vehicles are continuously upgrading safety technology, infotainment systems, and other configurations, while Nezha Automobile, which has been lax in research and development, is clearly unable to keep up. Additionally, domestic new energy vehicles are increasingly competitive in intelligent driving technology, posing a strong competitive pressure on Nezha Automobile.

Financial report data shows that in 2023, Nezha Automobile's R&D investment was 1.598 billion yuan, while the R&D investments of the three car manufacturers "Nio, Xiaopeng, and Li Auto" were 13.431 billion yuan, 5.277 billion yuan, and 10.586 billion yuan, respectively, making Nezha Automobile's investment seem insignificant in comparison.Undoubtedly, in the current market, all car manufacturers are caught in a cycle of self-competition. If NIO doesn't make breakthroughs in pricing and performance, it will be difficult to impress consumers, and thus sales will not increase.

Where the east does not shine, the west does. Despite the domestic market's cold reception, the overseas market has contributed significantly to NIO's sales.

In 2023, NIO delivered 127,496 vehicles for the entire year, with nearly 20,000 sales in the overseas market, a year-on-year increase of 567%. From January to June 2024, NIO's new energy vehicle exports reached 17,687 units, a year-on-year increase of 154%, ranking fifth in the new energy vehicle exports among car manufacturers and first among new force car manufacturers.

The growth in NIO's overseas sales is attributed to the low market penetration rate in overseas markets and the strong support from Southeast Asian countries for the new energy vehicle industry, providing NIO with a good space for development.

Having tasted the benefits, NIO has chosen to continue to compete in the overseas market, expanding its overseas market advantage through product exports, industry exports, and service exports.

Firstly, NIO plans to expand the scope of product exports, selling NIO vehicles to more regions and countries. NIO intends to launch the NIO L in the Southeast Asian market in the third quarter of 2024, and gradually explore the Middle East, American, and African markets in the fourth quarter; the European markets such as France and Italy are planned for the first quarter of 2025.

Secondly, NIO advocates for "industry exports," adopting localized supply chains and production models to increase production capacity. It is understood that NIO has successively established overseas factories in Thailand, Indonesia, and Malaysia, being one of the fastest new forces to build factories overseas.

Thirdly, NIO aims to expand its global service network to improve the travel experience and satisfaction of overseas users. In 2024, NIO plans to cover 50 countries with its global sales network and establish 500 overseas sales and service outlets.

For NIO, going overseas is no longer a choice but a necessity. Cultivating the ability to "localize" and finding an efficient route for overseas expansion is crucial.The time to break the deadlock is pressing, racing against the clock to find the "key to growth."

Nezha Automobile has created many miracles in the past, from automobile manufacturing to the comprehensive construction of sales and service networks, Nezha Automobile has overcome numerous industry barriers and found a path for development. Therefore, facing the current dilemma of declining sales, Nezha Automobile has shown a firm determination to break through.

However, in this round of elimination, breaking through competitive barriers and technological thresholds will become even more difficult, and the time for Nezha Automobile to break the deadlock is also more urgent.

On one hand, the technological thresholds for electrification and intelligence are continuously increasing, and the difficulty of innovation is intensifying. Once, new force car manufacturers only needed to build a qualified and compliant electric vehicle to "win without effort," but now consumers want higher quality cars. Nezha Automobile needs to invest more R&D resources, time, and talent, and continue to exert effort in technological innovation in order to gain more say.

On the other hand, traditional car manufacturers and new force car manufacturers are building high competitive barriers, and the competition for traffic is becoming more fierce. Traditional car companies like BYD, Geely, and Great Wall have strong car manufacturing capabilities and market resources; new force car manufacturers like Xiaomi, NIO, and Li Auto have good reputations and technological innovation capabilities. In comparison, Nezha Automobile's market influence and competitiveness are still relatively weak.

The field of new energy vehicles has risen to become the core battlefield of global competition in the new energy era. Faced with this red ocean market full of challenges and opportunities, if Nezha Automobile wants to carve out a stable and sustainable growth path, it still needs unremitting exploration and innovation, and the construction of a path to core competitive barriers is a long and arduous task.